Shippers Brace for More Suez Turmoil After COSCO Asia Attack

LONDON, Sept 2 (Reuters) – An attack by assailants on a container ship in the Suez canal has heightened risks for merchant shipping using the vital waterway, with further threats considered likely as political turmoil continues in Egypt.

On Sunday an army source said three people had been arrested after opening fire with machine guns on a Chinese-owned container ship passing through the canal, a big source of revenue for Egypt, playing down what the Suez Canal Authority’s chief had described earlier as a terrorist attack.

This is the first incident confirmed by officials involving a ship in Suez. In July the army said it had investigated reports of an explosion near the canal but found no evidence.

Egypt is currently governed under a state of emergency after the army deposed the country’s first freely elected president, Mohamed Mursi, two months ago, in response to huge street protests against his rule.

At least 900 people, most of them Islamist supporters of Mursi, have been killed since the army took over and cleared protest camps calling for his reinstatement.

Any major attack on the canal would further hammer Egypt’s economy, which benefits from about $5 billion a year in tolls for using the 192-kilometre (120 mile) waterway, the quickest sea route between Asia and Europe.

“The transit of vessels through Suez has long been of concern to many. The proximity to land throughout much of the transit makes it an attractive target,” said David Welch, of bomb disposal and counter-terrorism specialists Ramora UK.

“I would suggest that an attack on any primary sea line of communication or critical port would be high on the agenda of many terrorist groups. Imagine the chaos if they managed to disable or sink a large vessel across the canal.”

An Egyptian security source told Reuters on Monday the attack on the ship appeared to be down to individuals, rather than an organisation.

“We do not have information on the existence of an organisation that is targeting the movement of ships in the Suez canal,” the source said. “The available information confirms that some elements … were aiming to target the Suez canal as it is a vital and international facility and any incident there would have a large impact internationally.”

GROWING THREATS

The Egyptian source said such an incident could happen again despite intense security along the canal, adding that residential areas could be used to move light weapons around without detection.

“Security officials have highlighted apparent threats to the canal and its land-based facilities over recent months,” said Alan Fraser of security firm AKE.

“Security has been increased around major public assets in Egypt recently, although there is potential for further attacks over the coming months.”

The Panamanian-registered container ship COSCO Asia came under fire in a northern section of the canal on Saturday. The head of the Suez Canal, Mohab Memish, had said a terrorist carried out the operation, suggesting Islamist militants could have been behind it. Suez Canal Authority sources said a rocket-propelled grenade had been used in the attack.

“The attack on the Cosco Asia by terrorists, most likely foreigners or Egyptians working with foreigners from bases in north east Sinai, tells us that similar attacks by other foreign terrorists or Egyptians working with them, attacks launched by the land and meant to disrupt international commerce, are possible and can be successful,” said Michael Frodl of U.S.-based consultancy C-Level Maritime Risks.

Egypt has faced a rising number of militant attacks on security forces in the nearby lawless North Sinai region since Mursi’s ouster.

A spokesman for Maersk, the world’s number one container line, said its activities in Suez remained unchanged, “while we keep monitoring the situation and pay close attention to any updates or recommendations from local authorities”.

A spokesman with marine insurance managers Thomas Miller said separately: “We would advise all ships transiting that area to maintain a constant security watch.”

The Joint War Committee (JWC), which groups syndicate members from the Lloyd’s Market Association (LMA) as well as representatives from London’s insurance company market, said it was reviewing the situation.

The JWC’s list of high-risk areas, closely watched by marine insurers and risk assessors, has been extended to date as far as Eritrea in the Red Sea due to piracy threats.

“We are looking for more information about whether this (attack) is indicative of a trend or not and whether this has been carried out by an individual or a group. We would not be looking to amend anything until we have more details,” LMA senior executive Neil Roberts said on Monday.

“Currently Egypt/Suez are not on the listed areas, so only renewals and new business could be affected.” (Additonal reporting by Youssry Ahmad in Egypt, editing by Michael Georgy and Will Waterman)